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The M’s FSN deal

The M’s won’t be starting the M’s channel for at least 10y
The M’s are now the highest-rated, most-lucrative team without being broadcast on a regional sports network they’re owners of. It’s a great way for teams to hide money from revenue sharing, and the M’s, it seems, have decided again to forsake it.

The ratings
That FSN was willing to go 10y, 300m given the team’s fortunes says a lot about how the ratings have stood up over the last couple of years. They must be selling a lot of heavy-duty trucks.

10y/300m is a ridiculously small bump
If you look at TV deals for sports packages, they’ve increased in cost a lot since the last deal the M’s signed, and yet this one doesn’t reflect that. The M’s are getting a lot of money, but it’s surprising that they weren’t able to get more, as so many others have.

Why sign for so long?
This is what really baffles me. If the team believes that they’re going to return to contention, wouldn’t they want to extend the current deal, and make about as much money now, and then, as they did with the last one, push for a longer deal when they’ve got a pennant and all the leverage? With the market for sports broadcast rights ever-increasing, why would the team tie themselves down for the next decade for such a modest raise?

Obviously they think this deal makes good business sense, and the M’s are, business-wise, great at getting money out of the franchise. But I wonder what their thinking was here.

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49 Responses to “The M’s FSN deal”

IllinoisMsFan on
March 22nd, 2007 10:15 am

These deals tend to have a clause that allows the team to shop around, or opt out, at certain points. Most likely, the Ms will be able to explore other options in four or five years, and if interested, get out of this deal. So they are probably not “bound” to a ten year deal. The last deal had a similar clause in it and I’m guessing that the Mariners have plenty of options available to them.

You are 100% correct on the ratings, the M’s are by far the biggest thing FSN has going for it. Ratings have been strong in spite of poor performance on the field….FSN knows that without the Ms, they are toast.

As for the $300 million, I wouldn’t be surprised if this deal is worth a little more than that to the Ms. I’ve heard reports of a much larger figure. Perhaps this $300 million is just for broadcasting games and doesn’t include the other programing, such as “Mariners All-Access”, etc.

It just shows how extremely conservative and almost aristocratic Howard Lincoln, et al., are at managing the team’s finances. They’re quite lazy, really, about it. It definitely seems shocking that they’d get THIS conservative and take a 10-year deal, when others around the league are very much fighting for shorter-term, more speculative deal. They want their money, but they don’t want the most bang-for-their-buck that they can get. They definitely aren’t interested in improving the franchise. They’re just cool with the status quo, whatever that may be.

If the team believes that theyâ€™re going to return to contention, wouldnâ€™t they want to extend the current deal, and make about as much money now, and then, as they did with the last one, push for a longer deal when theyâ€™ve got a pennant and all the leverage?

Obviously, therefore, the team doesn’t really believe that they’re about to return to contention, and I tend to agree with them. Unless they go on another improbable, 1995-style run, they’re just going to be an average team. I don’t think they’ll actually be in the pennant race this year.

bongo on
March 22nd, 2007 10:43 am

Given the trends for compensation in broadcast rights, as well as recent salary trends, signing a 10 year deal seems like a poor business decision. About the only reason to go that way is if you believe there is a significant chance that fan interest in the Mariners will wither over the next few years, along with the viewer base, and that the lack of interest will continue. Unfortunately, that is exactly the course that the team seems to be on; if the team remains as mediocre as it has been since 2004 (or if it regresses) over the next decade, this might turn out to have been a good deal after all. However, rather than betting against the team’s success in an honest assessment of its own competence, it would probably be better for management to clean house so that a more optimistic business outlook would be justified. For example, there are scenarios where a Mariner-owned channel could indeed be a good business decision, but most of those require that the team actually succeed on the field.

Grizz on
March 22nd, 2007 10:48 am

The M’s are a conservative franchise, and as Thiel pointed out, the TV deal is the conservative move. In essence, the M’s decided on the safety of an annuity over the greater risk and greater reward of a 401(k).

The ratings are still solid, but dropping 1.5 ratings points is not insignificant. There is no guarantee against a further slide or for a return to prominence on the field — just look at the Sonics ten years ago and the Sonics today.

The small bump may reflect that FSN overpaid in 2000, so the new deal is the market correction.

Considering the cyclical boom-bust nature of sports broadcasting fees, the market may not be nearly as strong in a few years. The M’s obviously would not have made this move without hiring a consultant to analyze the current and future markets.

One of their biggest broadcasting assets is 72 years old. Niehaus is to the M’s broadcast as Johnny Carson was to the Tonight Show — sure, the Tonight Show has survived and continued to make money, but it is a diminished product. The M’s might not have wanted to risk waiting on negotiations until Jay Leno took over.

I agree. This says a lot about their performance forecast of the team. It’s a good business decision if the team is going to flounder, and if nothing else, they seem to be good businessmen.

Maybe the contract talks with Ichiro! aren’t going so well…

cjdahl60 on
March 22nd, 2007 10:55 am

On the first point in the post, what is the revenue sharing difference/impact to the M’s by selling the broadcasting rights as opposed to owning their own network?

vj on
March 22nd, 2007 11:01 am

If only Jay Leno or his sportcasting equivalent was available to take over for Niehaus.

Steve T on
March 22nd, 2007 11:03 am

I was stunned to read that for four years the M’s were the HIGHEST-RATED franchise in baseball. That’s frankly amazing, considering their market size (big, but nowhere near number one) and the existence of the Yankees. The fact that they’re still fifth after recent years is also surprising. Signing a ten year deal at these dollars suggests that the M’s are not just conservative, they’re slow-witted plodders.

Grizz on
March 22nd, 2007 11:05 am

CJ, the gross oversimplification is that MLB’s revenue sharing applies to team revenues, not network revenues. Teams with their own network have an incentive to split the revenues in favor of the networks (which are in essence tax-free) than the team (which are subject to the MLB tax).

Ralph Malph on
March 22nd, 2007 11:06 am

The problem with M’s broadcasts is that they are not grooming anybody to be Niehaus’ successor. A good announcer is somebody you’ve grown comfortable with over the years, like Niehaus. Rizzs will never be that, plus he’s got to be in his mid 50’s now. He’s not the future of M’s broadcasts.

When Niehaus goes, you’ll be left with Rizzs and some new young announcer nobody knows. At which point the ratings will plummet.

They need to dump Rizzs (nicely) and bring in a young guy so the fans can get to know him. Instead they just bring in old retreads like Hendu and Blowers to work with them as color guys, who are fine for what they do but aren’t the future.

Grizz on
March 22nd, 2007 11:13 am

Ralph Malph, meet Dave Sims.

Jon on
March 22nd, 2007 11:14 am

I don’t know enough about the alleged pact to know whether the M’s have made a good or a bad move financially. I’m certainly not going to criticize it without knowing the details, and I can’t see how anyone can either (yet).

It has seemed, at times, that the M’s might have undersold the naming rights to the stadium, but at least the Safeco company is still perceived positively by the general public, which hasn’t always been the case elsewhere (witness the scandal-driven name changes).

What I really like about the apparent new TV deal is that the M’s are seemingly in a really financially secure place for awhile, which should lessen the chance that they will try to beg for more money from the public or make outrageous demands as the lease gets closer to expiration. We shall see, of course. But having been through it so many times before, I don’t think my loyalty to the M’s could withstand one more round of threats to leave.

Most contracts include escalation, escape and other clauses that reflect the inevitability of changing conditions. Do we know for a fact the team does not share in the advertising revenue stream, for instance?

Think what you like about these guys, but they negotiate for a living, and are unlikely to sign in semi-somnolence.

Or while they are half-asleep, depending on how much you like phrases like that. (I paid for my English major. I get to use it from time to time.)

Like a player’s contract negotiated by Scott Boras, the M’s can opt OUT of this deal any time after year six.

JI on
March 22nd, 2007 11:34 am

I’m just glad the homes game will be highly defined.

Livengood on
March 22nd, 2007 11:36 am

I agree completely with PositivePaul and Grizz. In fact, before I read this thread, I wrote essentially the samething in thread before this.

Caveat: I suspect what IllinoisMsFan and Churchill have written about opt-outs is true, but I doubt those opt-outs come six years from NOW, but six years into the extension, which is still nine years away from now. A lot can change in that time.

Safety and status quo will win out over risk and creativity every time with this team.

colm on
March 22nd, 2007 11:40 am

Maybe the high tech savvy M’s ownership has bought into the idea of viewing and advertising online, and believes that TV ad revenues won’t be worth fifty bucks in 10 years’ time.

Again, gross over-simplification for illustrative purposes, but say that a team is owned by the same owner as is the cable network on which the team’s games are broadcast (as is true with most of the really huge market teams). Unlike a team such as the M’s, who negotiates a fair market deal with a cable network at arms-length, trying to maximize their revenue, a team whose owner also owns the broadcast network has every incentive to sign a grossly under-market deal for their broadcast rights, so that all the profit shows up on the network’s side, rather than the baseball side (where increased revenues mean increased revenue-sharing). To such media-owned teams, it doesn’t matter where the profit shows up, except that it is better for it to show up in a place where it won’t increase their revenue-sharing bill. Get it?

The fact that Selig has allowed this to happen has essentially undermined any real effect revenue-sharing in baseball might have had. Teams only pay in revenue-sharing what they choose to pay, and MLB has turned a blind eye to the obvious.

Grizz on
March 22nd, 2007 12:35 pm

Dave Sims is 54 years old.

Yeah, at that age, he might hold the job for only 15-20 years.

JMHawkins on
March 22nd, 2007 12:40 pm

But I wonder what their thinking was here.

FSN is a gritty, fan-favorite that can provide veteran leadership (not to mention left-handed sock)?

In years past the M’s made some very smart broadcasting decisions. I think in ’95 they signed a deal where they sold their own advertising at whatever rates they could get and kept a majority of the profits. That resulted in a huge boost to the coffers when the team became good.

They also made a ton of money in their last radio deal, getting KIRO and some other stations to engage in a bidding war.

This $300 million dollar deal looks small, given the size of their broadcast area. I wouldn’t be surprised if they have some kickers in the deal that a) shorten the time frame or b) allow them to reap additional monies if they sell ad time at higher values.

Nintendo Marios on
March 22nd, 2007 1:40 pm

3 – Exactly.

Howie and Chuck are as market savvy as they are baseball ignorant. VORP eludes them but both can figure FCF while asleep. Howie and Chuck just choose to lock in, on the longest terms possible, a deal they know is subpar.

That tells everyone all anyone needs to know about the future of winning baseball in Seattle.

PS – Sayonara Ichiro.

msb on
March 22nd, 2007 2:02 pm

I could swear Rizzs just said Frank Thomas was warming up in the bullpen for the M’s.

gwangung on
March 22nd, 2007 2:07 pm

Howie and Chuck are as market savvy as they are baseball ignorant. VORP eludes them but both can figure FCF while asleep. Howie and Chuck just choose to lock in, on the longest terms possible, a deal they know is subpar.

That tells everyone all anyone needs to know about the future of winning baseball in Seattle.

Now this is bonehead stupid reasoning.

Even those two chuckleheads in the ownership box know that you make money either by tanking it entirely and using cheap players, or you win.

And any ownership group that contains Microsoft and other high tech leadership just aint gonna do the first.

Of course, as we all know, wanting to do the latter is in no way the same as knowing how to do the latter…

_David_ on
March 22nd, 2007 2:29 pm

Anyone listening to the game know why HoRam was pulled after .1 inning? Is he hurt?

ok. unforseen problem with adding Blowers to the broadcasts? It encourages Rizzs even more to reference 1995.

BillPhi2 on
March 22nd, 2007 3:11 pm

32 – “Wasn’t that Edgar double great? No quit in that ballclub! Beating the Yankees after that dramatic one-game playoff featuring that great hit by Luis Sojo…’Everybody scores!’…that was one heckuva year by Griffey and Randy and Lou and the whole crew. Mike, you were a part of that team. Must’ve been a great experience…”

Yeah. I see what you mean.

msb on
March 22nd, 2007 3:17 pm

not to mention that with the White Sox you see ‘Little Joey Cora’…

Pete on
March 22nd, 2007 3:52 pm

This isn’t a game thread, but why did Horacio Ramirez leave after 1/3 of an inning?

MKT on
March 22nd, 2007 3:52 pm

Howie and Chuck are as market savvy as they are baseball ignorant. VORP eludes them but both can figure FCF while asleep. Howie and Chuck just choose to lock in, on the longest terms possible, a deal they know is subpar.

That tells everyone all anyone needs to know about the future of winning baseball in Seattle.

Indeed, the market has spoken. PR and advertising can say all they want, but dollars speak louder than words.

There are of course some other explanations as others have said, such as possible opt-out clauses, or a future rise of internet broadcasts and declining ratings for TV, but overall it’s not a positive vote of confidence for the future.

Now this is bonehead stupid reasoning.

Even those two chuckleheads in the ownership box know that you make money either by tanking it entirely and using cheap players, or you win.

And any ownership group that contains Microsoft and other high tech leadership just aint gonna do the first.

Profitability from on-field success (or from miserliness on expenditures) can be, and sometimes are, separate from profitability from other aspects of the operation. The M’s could be (and probably are) screwing up on the former, with a high-cost and low-wins team. But that doesn’t mean that they will therefore be making lousy decisions with their TV contracts too.

msb on
March 22nd, 2007 3:58 pm

#35, see #29.

dogboy on
March 22nd, 2007 7:15 pm

Anybody know if FSN has any plans to offer an HD broadcast? I know other Fox Sports franchises have HD broadcasts. It seems rather ridiculous that in a tech city like Seattle we don’t get High Def from Fox.

eponymous coward on
March 22nd, 2007 7:46 pm

Microsoft is, even tangentially, involved so all is well?

Way to misread that.

Trying to win is not the same as succeeding at winning. Thinking you know something is not the same as knowing something. The team’s honestly trying to be successful- they’ve just selected bad strategies for it, and don’t have the intellectual honesty to re-evaluate their approach. Basically, this is going to continue until enough bad seasons run off the incompetents, or people retire/move on.

The M’s could easily ditch 50-70 million in payroll and win 60-70 games while making money. The Twins did it for years under Pohlad and the Royals have done it for even longer.

LB on
March 22nd, 2007 8:42 pm

#38: FSN-HD broadcasts of M’s games were available exclusively on DirecTV last year. If you read any game threads for HD games, you’d remember my b1tchin’ when they’d cut to the lo-def feed for the 9th inning.

This says that Comcast will pick up the home games and 6 away games in 2007, but I don’t see anything in it about exclusivity. I also wouldn’t bet on getting all 9 innings in HD regardless of whether you pick the game up on HD or satellite, because it’ll still be the same bunch of rocket scientists and Rhodes Scholars working the board at FSNW.

DavidM3 on
March 22nd, 2007 8:44 pm

Anybody know if FSN has any plans to offer an HD broadcast? I know other Fox Sports franchises have HD broadcasts. It seems rather ridiculous that in a tech city like Seattle we donâ€™t get High Def from Fox.

I’ve been wondering for a while why I have to wait to see the Ms on ESPN to catch them on HD. Glad to see I’m not the only one. Any info that someone might have on FSN and their HD plans through the different outlets (Comcast, Dish, & DirecTV) would be greatly appreciated.

If CBS can’t get their HD broadcasts right for NCAA games, I can’t why FSN would do any better.

gwangung on
March 22nd, 2007 10:17 pm

27 – Right.

Microsoft is, even tangentially, involved so all is well?

No, Mr. Economically-Challenged. If Howie and Chuck wanted just to make money, they’d slash payroll and suffer with the attending ratings and attendance drop. But the ownership group is full of people who want to win and CRUSH the competition. That’s their entire mindset, which extends throughout their entire lives. No way are they gonna sit back and collect the dough–they don’t have the temperment for it. They want to win AND make money, which is why they have what they think is such a high payroll.

Except they suck at it and have no clue WHY they suck. Otherwise, they’d toss Chuck and a good portion of the organization out the door.

I’m not sure that’s true. The M’s are a conservative organization, and they’re also one of Bud Selig’s loyal followers, which makes that strategy even more unlikely to be considered.

From their perspective, the status quo – spending a reasonable amount and then crying about it in public – makes them $20m a year (declared). There’s really no reason at all for them to risk making more, or less, than that as long as they know that they can continue on this path and make that much every year.

hub on
March 23rd, 2007 2:54 am

Say what we will about the M’s management in their lacking ability to evaluate, develop, or sign/keep talent. But there’s one thing this organization IS good at: making money hand over fist. All the while making the public believe otherwise. When it comes to managing (or even ‘cooking’) the books, these guys know what they are doing and more.

With that said, there is one thing few here are saying: this deal ensures that us fans get to see the Mariners on TV for another 10 years. Something that wasn’t such a sure thing when looking at the current baseball product that takes the field. For that, I’m happy.

Nintendo Marios on
March 23rd, 2007 8:59 am

39 – This is a true statement:

The teamâ€™s honestly trying to be successful…

The problem is the word “successful”. As you say, “Thinking you know something is not the same as knowing something.”

You present the view that the Ms want to win but don’t know how. On the other hand, Howie and Chuck have said on any number occasions that the franchise’s goal is “competitiveness”. And they’ve never been shy about the budget-centric nature of “competitiveness”.

The distinction between the two viewpoints is important. Do Howie and Chuck have a skills problem or a goal problem?

Now consider the TV contract Howie and Chuck just signed with FSN. If you believed you had a skills problem, would you lock in a subpar deal for a decade? Or would you take the shortest deal necessary, address you skills problem and come back into the marketplace?

Howie and Chuck are not dottering, grandfatherly fools. They are highly successful financial managers who believe they are pioneering a new way to run a baseball franchise, a way that insulates franchise profitability from variable, risky and expensive wins and thus builds value more rapidly.

They do not share our desire to win games, pennants and rings above all.

CouchGM on
March 23rd, 2007 7:26 pm

You’ve got me daydreaming…’The M’s Channel?’ Tell me about this concept. That would be awesome. We could see classic games, spring training games…Heck, I’d even watch the draft… and High Desert games. Is this an option they’ve considered? How about Channel #51 on the dial?